Bahrain’s Investcorp targets US service sector, UK property

Bahrain-based Investcorp is responding to the election of US President Donald Trump and Brexit by seeking investments in US business services and British real estate, the private equity firm’s Co-Chief Executive Rishi Kapoor said.

Investcorp, which expects its assets under management to rise to around $21 billion in the first half of 2017, on Thursday reported a fall in profit to $35.6 million in the six months to Dec. 31 from $50.9 million in the prior-year period.

This was largely due to the writedown of a real estate investment in the US which it bought before the global financial crisis, Kapoor told Reuters on a call.

Among potential investments in the US, Europe and the Gulf, Investcorp was looking for opportunities created by Britain’s vote to leave the European Union and uncertainty over whether Trump’s US administration would deploy fiscal stimulus and the pace of interest rate hikes by the US Federal Reserve.

“As a consequence (of the uncertainty) in the US, the kind of businesses we are focusing on are those resilient to cyclical downturns,” Kapoor said, adding that business services was one area in particular where it was looking for opportunities.

Kapoor said US-based AlixPartners, the global advisory firm it agreed to acquire ownership stakes in along with other investors in November, was an example of this thinking.

Real estate assets

In Britain, Investcorp was looking at real estate assets with a long-term horizon in order to overcome any market volatility in the next two or three years, he said.

The pound’s slump since June’s Brexit vote has encouraged investors from some Middle Eastern markets linked to the US dollar to look for openings in the property market.

Investcorp, which was founded in 1982, is one of the oldest Middle Eastern private equity houses and is best known outside the region for listing luxury goods brands such as Gucci and Tiffany & Co.

It has increasingly branched out into other sectors and set out a goal in 2015 to more than double its assets under management in the next five to seven years to $25 billion.

In a big step towards achieving that goal it agreed to buy 3i Group’s debt-management business in October. When that deal closes in the first half of 2017, Investcorp said its assets under management will reach around $21 billion.